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Review of Jones V Kernott

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In November 2011 the Supreme Court delivered what most lawyers have described as a “long awaited judgment” that is of significant importance of couples that live together.

Until this decision the leading authority on the respective shares that people own in their houses was the 2007 case of Stack v Dowden. This said the Courts were able to look at the intentions of the parties at the time they bought the property and imply that they own the property other than on a 50/50 basis. At Court of Appeal stage of Jones v Kernott the Court (whose decision was later overturned) stated that Stack v Dowden had not allow the Courts to find an intention of the parties when “none was expressly uttered nor inferentially formed”

I should state at this point that these cases are based on the issues that arise when two people are said to own a property. Whether someone who is not named as a legal owner can claim an interest in a property as a result of their actions is a slightly different question altogether and, although relevant, is not what was asked in Jones v Kernott.

The facts of Jones v Kernott are quite straightforward. The parties bought a property in Essex in 1985 for £30,000. Ms Jones had paid £6,000 and the balance was raised by way of mortgage. The house was held in their joint names they shared the payment of both bills and mortgage payments. In 1993 they separated and Mr Kernott moved out. At this point he stopped contributing to the household expenses and some 13 years later he claimed that he still owned 50% of the equity in the property. It was accepted that at the date of the parties’ separation in 1993 the interests in the property would have been held equally.

In November, the Supreme Court decided that Mr Kernott’s current share in the property was just 10%. As such the decision in Jones v Kernott goes one step further than in Stack v Dowden and allows the Courts to find that if the intentions of the parties had changed since they bought the property then the Courts can imply a further alteration to the shares that they own in the property. Importantly, the Courts have stated that whilst their primary aim is to ascertain the actual intentions of the parties, whether expressed or inferred, if it is not possible to do so then the Court “is driven to impute an intention which the parties may never have had”.

The Court agreed that the following principles will apply:

  1. Where a couple jointly own a property the starting point is that they are beneficial joint tenants, therefore owning the property on a 50/50 basis, unless there is an express declaration of trust to the contrary. In recent times the TR1 form used to convey properties from one party to another has included a provision for such a declaration to be made at the time of the transfer. Whether this reduces the number of claims of this type depends in part on whether the form is filled in correctly!
  2. This presumption of equal shares can be displaced if it can be shown that the parties had a different common intention at the time of purchase, or if their intention subsequently changed.
  3. The common intention is to be deduced objectively from the parties' conduct.
  4. If it is clear that the parties did not intend to own the property on a 50/50 basis or that their intention has since changed, but it is not possible to decide from the evidence what shares the parties intended to hold the property in, the parties will be entitled to the shares which the court thinks fair having regard to the whole course of dealing in relation to the property.
These guidelines allow for a Court to consider what is fair when it is not possible (by direct evidence or by inference) to ascertain the parties’ intention as to their ownership, either at the time they bought the property or subsequently by their actions.

It seems strange that the Court accepts the presumption of a beneficial joint tenancy and 50/50 ownership (previously stated to be a “strong presumption”) but can now be displaced even when there is no actual evidence that the parties had intended to hold the properties in different shares.

Following this decision it is clear that the only real way to ensure that your property is owned and held as you hope is to enter into a declaration of trust or a cohabitation agreement and to ensure that, like a Will, this is reviewed on a regular basis and as your circumstances change.

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